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So many companies talk about how they are becoming more and more data driven. While I think that’s a good thing, I also think it could also be a very dangerous thing.

Being driven by something is much different than being intelligent about something. A person or company that is data intelligent is very different than a person or company that is data driven. Being driven means you are propelled by something. It’s not enough to say we use data to propel us forward. Using the right data with the wrong conclusion can be as detrimental as using the wrong data, or no data, at anytime.

Being intelligent, on the other hand, means you have a high mental capacity for something. It’s a process brought about by good judgement and sound thought. Driven is compulsion whereas intelligence is skill. Let’s work to make sure the fashion industry becomes data intelligent.

Understand who your customer is and what they want from you. If you’re a brand and sell your products to other retailers, you need to know what their customers bought of your products. It’s completely irrelevant what you sold to the retailer. Likewise forward bookings, or orders from your retail partners, are useless. Just because you sold it to them, doesn’t mean you’ll sell it to me. If you want to build a brand that customers love, look only at what they’ve bought from you. If they didn’t buy it, they didn’t want it. That could be a function of the right product at the wrong time, or the wrong product at anytime. Your job is to figure out what your customers wanted and then make sure they can get more LIKE it at the right time in the future.

History is a complicated thing. We all like to think we learn from history. It’s often said that history repeats itself. We should be able to learn from our mistakes, and if we understand what happened in the past, we can make the future better. Unfortunately it’s not that simple. History doesn’t exist to offer us any clues into the future. Just because one thing happened, and another did not, that doesn’t mean we are better off because of what did happen. This is a good thing to contemplate, because all of us use history to try find comfort or reason in what we’re doing or thinking about today. Our failsafe is our experience–when in doubt, just look to the past. And if we want further validation about what we’re doing, we typically look to history over a longer period of time even though there is great risk in assuming that what happened previously may happen ever again. The Greek philosopher Heraclitus said, “no man ever steps into the same river twice, for it’s not the same river and he’s not the same man.” As humans we adapt and change constantly in an environment that does likewise. The only thing we know about history is that it has little bearing on what will happen in the future.

Yet if we do look at the advancement of humans, one thing is apparent, its the creation and implementation of technology that propels us forward. I’m not talking about technology in terms of wires and electronics necessarily, but rather technology in the sense of finding ways to do things more efficiently and for the “betterment” of ourselves and hopefully the planet. The wheel was a technology. Fire was a technology. Tools were technologies. Railroads and steam engines were technologies, as was electricity and now genetics. Humans that didn’t embrace fire or implement tools didn’t likely advance and survive as those who did embrace those tools. Countries that embraced railroads and steam engines during the Industrial Age when they were relatively new are more advanced today than those that did not. Likewise we all understand the gap between those who have embraced digital technologies and those who have not. It’s hard to imagine having to call a friend on “telephone” thats not in our pocket. It wasn’t too long ago that we would get phone calls and have no idea who was calling! Today we text, Instagram, Snap, and Tweet.

The point is that we advance when we embrace technology in whatever form that technology may be. It is with this understanding and knowledge that I say to the fashion industry in particular, since it is my focus, that it is struggling desperately because it is not embracing technology. The fashion industry cannot apply methods and ideas in today’s consumer marketplace with outdated technologies. The Soviet Union was one of the first countries to adopt railroads and steam engines because the founding fathers of communism saw that having the ability to move massive amounts of food, fuel, and other resources throughout the nation would be vital in its ability to advance its cause and provide for all people regardless of means. For many years the Soviet Union thrived because it implemented those technologies and was able to provide resources throughout a vast network that satisfied massive amounts of people. Yet many scholars today will tell you that the key reason the Soviet Union failed was because later stage leaders, Khrushchev and Brezhnev, failed to adopt new technologies and tried to lead the country with the same railroads and steam engines adopted decades earlier. It didn’t work. People couldn’t get food and resources. The system broke and the Soviet Union failed because it didn’t embrace new technologies that could have advanced its efforts further and met the needs of its people.

Perhaps one of the chief reasons for the success we have in the U.S. and other countries like Israel and the U.K. is our investment in technologies. Investment means that one makes available resources to enable something that we think will have the potential to make future lives better. Those resources include many things, but particularly time, money, people, and thought. There’s been several articles in Forbes and elsewhere from “futurists” in the fashion industry that talk about how e-commerce really isn’t working because it continues to lose money. While many startups don’t make money and often fail, it is a highly flawed argument to say that we should not go forward because the trail is too dark. Investment in technology propels us forward. Without investment and the advancement of technology, growth stalls and economies collapse. Saying that e-commerce isn’t working and stores are still the future is an argument not grounded in much foresight, and certainly not formed from a base of knowledge in what technology is or investment means.

Amazon is not the future because it is here, and it works extremely well. Saying something is coming in the future means it either does not yet exist or it has much refinement to be had. We could say that 3D printing is the future because a lot of kinks have to be worked out. Biogenetics is the future because we’ve only just begun to understand its potential. Travel to Mars and hyperloop transportation might be in the future because, well those concepts are just artistic renderings at this point. Amazon exists and works great. It’s pretty flawless. We can click a few button and like magic whatever we want, we can have delivered to us in almost no time at all.

I recently purchased a few items from Amazon Prime on a Sunday morning that was delivered to me that evening. I had assumed the items were in a local distribution center someplace here in or around New York City where I live. How else would Amazon get a purchase to me on a Sunday? Yet when the package arrived, I looked and saw that it was shipped from Lexington, KY. I placed my order around 10:00 in the morning; it was picked, packed, and shipped from Lexington, KY (which is 587 miles away from my apartment); then put on a plane and delivered to me by courier before I ate dinner with my family at 7:30 that evening. Want to know what I bought? Two bottles of Windex and a book! I could have walked 250 feet up the street to my local pharmacy for the windex and a comfortable mile to the book store nearby. But why? First of all my local pharmacy, like many around the country, always has 5 people in the store and 10 people in line. I don’t like that. There’s nothing worse than wasting our time standing in a line for something that should be pretty simple to do. Instead I spent my day by doing the things I enjoy. I worked out, enjoyed the day, and most importantly spent quality time with my wife and daughter. Amazon probably didn’t make much or any money. That’s irrelevant. They invested in technology and innovation that made my life better. Over time they will change millions and millions of more people’s lives and do that for products well beyond windex.

Isn’t this what technology and investment is all about? Shouldn’t a company, it’s CEO and Board of Directors, have the foresight to see what is happening around them and make sure investments are made in the right technologies? It’s a poor argument for out-of-touch brands and retailers to say that we should waste our time so they can try to earn money with inefficient and ineffective business models. If my local pharmacy had had a better process in place so that I could effortlessly get what I wanted, at a fair value and without having to stand in line, then I may have just gone there and made my purchase. Instead the process was pay more money, stand in line, and waste your day. We live in a humanist decade. It’s not up to companies to decide how we should spend our time or consume its products. It’s up to companies to figure out, through technologies, how to make our lives better and more engaging. The fashion industry needs to consider that what many are trying to impose upon modern consumers today is the opposite. Consumers have moved on from touch and feel, to want and have.

Amazon doesn’t throw off profits to shareholders because its CEO, Jeff Bezos, understands that in order to advance, the company absolutely must invest in and continue to develop technologies. Almost every brand and retailer in the fashion industry today is looking to find itself with the same fate as the Soviet Union because few are embracing technology. Many fashion industry CEO’s fail to see that the technology they need is staring them in the face. It’s called Amazon. Don’t try to create it, combat it, or prevent it. Use it. A lot of CEO’s continue to “strategically” review options to protect themselves from Amazon and consumers who want to just click. Good luck with that. Without a doubt, brands that embrace technology will advance while those that do not will falter and fail. Let’s also be clear about what technology means here as well. Gimmicks are not technologies. Fun little marketing tools are often short lived and poor investments. The truth is there’s little more reason for us to go into a department store today than there is to take a train from New York to Ohio. If it’s the only choice we have, then great. But there are so many other better choices to get from New York to Cleveland than by train. If it were a bullet train, then that might be another good option. The reality is that taking an often run-down train for a 14 hour ride to save a very little bit of money really makes no sense. The concept of “stores” in the fashion industry is the equivalent. If you want to have a store, great. But don’t use technological gimmicks to entice sophisticated humans. Make your store experience comparable to a bullet train. It’s the investment in technology that gets you someplace with ease and satisfaction.

Let me be clear, I don’t work for Amazon, and I’m not plugging its platform for any reason other than I see its impact on an industry I enjoy. I have always been advanced and entrenched in technologies. When I was a child I had the newest fishing rods and reels. I didn’t catch any damn fish, but that’s besides the point. I was an early adopter of the palm pilot. I’ve been on a Mac forever, and we have an Echo Dot in our apartment. I research and embrace advanced workout techniques and nutritional programs. I also use new shampoos that magically make my hair less grey (they work!). Suffice it to say I appreciate technologies that make my life better. Why not? Life is to be enjoyed. Technologies, whether they be fire, wheel, or Google, allow me to grow, do things faster, learn more deeply, and enjoy the people around me deeply and more frequently.

We have to see the forest for the trees, and Amazon is likely but a tree–its not the forest. There are new technologies well on their way that go well beyond Amazon. The brilliant thing about this is that Amazon is likely nurturing a big part of this new forest with it’s AI called Alexa. With artificial intelligence like Alexa, or Siri and Ok Google, we don’t have to keyword search for what we want, we only have to ask. Having the ability to ask an AI to obtain whatever product or information we want is a vast forest quickly growing. So while the fashion industry continues to ponder over products and massively overproducing and distributing its wares, there’s a new forest growing that will completely overwhelm all of the industry’s old technology–including its people, products, and stores. If the fashion industry doesn’t begin to embrace technology like Amazon and its potential now, much of it, including most of its designers and retailers, will become the equivalent of a steam train. This isn’t because of Amazon. It’s not because e-commerce companies don’t make money. It’s not because consumers are fickle. And it’s certainly is not because the weather hasn’t been cooperating with retailers. It’s because fashion industry CEO’s, boards of directors, and other stakeholders charged with growth and innovation are not recognizing the appropriate technologies that are critically needed to advance their businesses.

So ok great, should we expect the entire industry to jump on this and get on the wagon towards advancement? Absolutely not. In addition to knowing that those who have embraced the wheel and fire likely lived better, survived and advanced quicker than those who did not, we also know that it has always been the findings or work of a very few that has advanced the masses. The question is are you working for or part of the few? If you look to your left, and then to your right, you won’t see the person who will likely lead an advancement. It’s probably not your CEO. Most CEO’s work to inspire and encourage, and there’s nothing wrong with that. Yet that does not by default enable or motivate an action to find and implement technologies that will advance a business. The question really becomes, are you and the people around you thinking forward, stuck in the past, or just enjoying the present? Hopefully there’s a good balance.

So where do we hope to find this agent of change, this person to guide us or product to prepare us? Where do we find these people that have a sensitivity to things happening all around us so we can embrace tools that might help us advance? That’s a difficult question to answer and likely a more difficult person to find. Old farmers used to say that the more brilliant the goat, the more disruptive it is. Hence most farmers over the many centuries have looked to rid their pastures of the brilliant goats so the rest complied. Be brilliant. We all have the profound capacity to think and do. That’s what makes us human. Perhaps therefore, it starts with all of us from a abundance of listening, a curiosity for learning, and a respect for disruptiveness. If we listen, we learn. If we’re curious, we gain. If we’re disruptive, we advance.

The fashion industry has tremendous opportunity to advance with modern technologies. Start by asking if your product is a recognized and searchable item. Does your brand have searchable clout? Until recently, the algorithm for a fashion consumer purchase started with the brand or designer followed by marketing, promotion, item, then store. The point is you created a product to make a brand that people sought out and went to stores to purchase. It has quickly shifted to item or need first, followed by ease of consumption second, and brand or designer third. That’s a much different path to purchase. Think about it for a moment. Algorithms are essentially recipes. Start with this, add that, stir together, bake till done. What used to be done in a physical world, can now be done in a digital world. To succeed, we need to think in digital terms. The industry is no longer as simple as build stores, promote a lifestyle, dress the windows, then ring the cash register. The recipes are different and much more non linear. There’s a different path towards consumption and fighting against something that has become essentially a new humanist path is not a plausible endeavor. Understanding how that consumer path has evolved is a much better way towards happiness and success for all stakeholders.

A key to understanding this path is recognizing that consumers no longer wish to be viewed as consumers, but rather as humans. We don’t want to be sold to. As humans we recognized that we have minds and we live in a world today that is largely free from famine, plague, and war. We have evolved to think more about experiences and wants than fears and needs. Push marketing doesn’t work today. The idea that a few people can design and develop a product then tell you though marketing that you have to have it and that you need to come to their stores to get it, is quickly becoming an extremely foreign concept recognizable only by those who remember the rotary phone or prefer travel by train as opposed to plane. Google has made keyword search a humanist path. From it and because of it, we can get whatever we want, whenever we want it, from Amazon. That puts a tremendous amount of power and potential on pull marketing. Brands need to have searchable clout. Businesses like Levi Strauss should be using its power of searchable recognition to let consumer find and obtain what they want–on Amazon. Jeans = Levi’s. Yoga = Lulu. Running = Nike and so on. Keep in mind that search technology has advanced tremendously. Google is seeing its keyword search expand from one or two words into complete sentences at this point. That means people aren’t searching “jeans”. They’re doing keyword search using complex terminology and the technology understands it. I just did a keyword search for “what’s the proper way to use perhaps therefore” and got a direct source to set me straight (let’s see if you find its use herein). Brands ought to be thinking in terms of searchable recognition. It’s what we do and how we source what we seek. Very soon, and almost certainly within the next decade, consumers will ask artificial intelligence sources for the vast majority of their purchases. Don’t fight it, be there. Invest in it and embrace it.

Here’s how brands need to think about embracing Amazon since it’s a technology they should all be embracing. Start with keyword search. Is your brand or product recognizable enough to be a keyword search. You have to have search clout. In the best case scenario you’re a brand like Levi Strauss. Want a new pair of jeans? Keyword search jeans or levis or 501, and you’re going to get awfully close to what you want very quickly without leaving your home or office. Levi’s has a decent presence on Amazon and if they were to keep the assortments focused around what are likely high frequency searches for its core products, they’d likely being doing very well and managing their inventories really well.

Fashion industry CEO’s, boards of directors, employees, and other stakeholders have to ask themselves how they can become successful with Amazon, not how to prevent it. Amazon is not the future, it’s the present.

“Supply and demand is always the root problem in business. It’s been true since Phoenician traders raced to bring Rome the coveted purple dye that colored the clothing of royals and rich people; there was never enough purple to go around. It’s hard enough to invent and manufacture and market a product, but then the logistics, the mechanics, the hydraulics of getting it to the people who want it, when they want it—this is how companies die, how ulcers are born.”

— from Phil Knight, “Shoe Dog: A Memoir by the Creator of Nike”

Be sure to read this memoir by Phil Knight of Nike. It’s a great look into what it takes to create and build a world-class brand like Nike. Anyone interested in starting a business will quickly appreciate that luck, drive, grit, and determination all played a major role in the birth and growth of Nike. You’ll need all of those to build your business too. And for anyone in the fashion or consumer industry, the above quote is gold. The “HOW MUCH, WHEN, AND WHERE” is equally as important as the “WHAT”. It’s doesn’t matter how much data you read, it’s what you do with it that counts.

One of the key and exciting opportunities for a wholesale brand to consider in order to avoid continued deterioration of its business with department and specialty stores is to move away from a sales and planning organization towards a more proactive partnership that solves the business needs of itself and its wholesale partners.

In my first post in this series, I spoke about how both wholesalers and retailers continue to use and promote a business acumen that is poorly managed, weakly aligned, and severely outdated. A large part of that is the way wholesale brands approach business with their retail partners. If you haven’t read the first series, I encourage you to read it now.

The challenge is, in my opinion, that most wholesalers continue to use sales teams to sell-in product and planning teams to analyze to current selling performance rather than forecasting forward placements. The best brands work to have planning and sales teams in sync in order to most effectively find opportunities that will drive more sales while also ensuring markdowns and margins perform as strong as possible. Wholesale brands that have done this well in the past include Coach, Nike, and Michael Kors. These business worked to manage the presentations, sell-thru, and success of their products through the wholesale channel. They had strong sales and gross margins as did the retailers they sold products through. We did this at Tommy Hilfiger in the 1990’s and likewise had incredible success.

This proactive effort worked well for the industry, but many conditions, including channel disruptions, excessive promotions, and fast-fashion retailers, make these efforts far more complex today. Even the best proactive efforts are falling short from the performance that’s possible through an effective and disciplined wholesale strategy. Worse yet many brands haven’t created these teams to be proactive–they operate reactively by reviewing current selling and respond to internal calls to sell more goods. These knee-jerk reactions ultimately weaken results further. Driving sell-in promotes high gross sales–but markdowns, returns and other promotions to move those goods through the retailers often results in soft net sales and weak gross margins. Product is then blamed for bad performance, people lose their jobs, and brands can’t invest to find innovative ways to grow their businesses.

Critical path 1 = DON’T SELL–SOLVE.

The brand of the future needs to be a problem-solver, not a sales organization. This is true regardless of its distribution through wholesale partners or DTC. Doing business with department stores requires that a brand perform to certain sales and margin expectations. If you can’t make the wholesale partner perform, you won’t get the forward investment you want. On top of this, department stores are eager to take inventory and promote it. There’s little risk to them since the brand needs to ensure margins and sell-through’s are adequate. The question is who is fooling who?

Brands have to solve this problem by developing their teams to work with their wholesale partners as a portfolio manager does with her capital. Thinking that inventory grows on trees is an incredibly bad idea. Inventory is the biggest investments a wholesale brand makes with its capital. Businesses get strapped for cash when they have too much inventory invested that doesn’t move. No brand has gone bankrupt because they had too little inventory. Probably the worst effect of too much goods in too many places is that it destroys any sense of consumer demand. Why buy at full-price when clearly this shit has to be marked down to move out the door? Consumers are smart and they’ve been well trained. This problem however, can be solved by business managers or account partners that think through the problems.

I should clarify that this doesn’t mean changing the titles of your sales team. That won’t work. Having business managers means training and coaching, as well as finding new talent that has this acumen. It also requires time and discipline. The process is highly trainable. Existing sales teams are often very good at managing relationships with wholesale partners, and planning teams often have the quantitative skill set necessary to execute a proactive forecasting efforts. This is a mindset effort that needs to be addressed by leadership, and innovative leaders will quickly see the benefits to developing teams that problem-solve their businesses to execute with certainty and clarity and drive sales while expanding gross margins by vigorously managing inventory cycles.

Brands of the future will be margin-makers, not cost-cutters.

Critical path 2 = PLAN BY CYCLE, NOT BY CATEGORY.

On a long tail business like fashion, where goods are committed into production many months before they’re available for purchase, planning by classification and category was the norm. Many brands currently have planning and allocations teams that buy future products in bulk then distribute those goods to stores and channels once they are getting closer to being delivered to the warehouse for distribution.

The thinking of planning and allocating is that teams can review current selling trends and flow products accordingly to stores and channels that “need” the inventory. The challenge is that this effort often results in a mishmosh of products delivered to stores at various times and inventory control becomes highly reactive. In my experience, these businesses typically have the worst inventory management in place.

Planning and allocating goods is the equivalent of day trading. The best planning teams act more like portfolio managers. These teams do extensive research and analysis to determine how to best place and distribute products across various doors and channels while protecting an assortment that enhances the brand’s sensibility. Once that path is set, only minor adjustments are done and usually only to offset production changes.

Meanwhile fast-fashion brands like Zara have taken the industry by storm because they react to trends quickly and can get production to stores in a handful of weeks. Zara is a vertical operator and has the technologies to do what few other brands can do. For almost all other brands, especially those distributing through wholesale partners, trying to accelerate the time to market is an unlikely, and frankly an unnecessary endeavor. The fact is that just because you can drive faster, it doesn’t mean you can drive better.

Cycle-centric planning in a methodology that plans products according to lifecycle rather than category or classification. Some products live year-round, others need to live only a few weeks, and still others can live for a season. Being able to plan those businesses accordingly allows a brand to focus its efforts on ensuring maximized sales of replenish-able products over an extended period of time. The best brands will work to minimize inventory in the stores and at their retailers and focus on just-in-time delivery across all product categories.

The effort essentially works to utilize a wholesale partner’s stores and digital presence as a model stock of inventory, and then replenishing long-tail products as necessary. Short-tail products, which are fast-fashion and directional, should be planned and placed to sell-through quickly and be gone. The ability to incorporate this methodology to planning a business is significant. Cycle-centric planning is designed to accelerate turns, greatly reduce markdowns, and allow greater focus on how a brand articulates newness and seasonal assortments through retail partners.

Executing a cycle-centric process requires training, but more importantly it requires critical thinking and buy-in from management. One of the hardest things for management teams to do is work towards a proactive acumen as opposed to reactive jumble. The results of enabling a cycle-centric process would provide management much greater visibility into forward sales and margin potential while also enabling much greater control of promotional activities and cadence.

While marketing teams focus on omni-channel efforts to ensure a seamless shopping experience across multiple channels of business for a brand’s consumers, brands likewise need to focus on turning sales teams into account partners and giving planning teams the ability to develop cycle-centric methods that will certainly enhance the entire omni-channel experience.

There’s three things I think brands and retailers need to start getting better at if they want to improve business right now. We know you have to create great product and you have to have an awesome marketing campaign, but you also have to manage the amount of product you produce and create a sense of demand.

I cannot even begin to tell you how many times I’ve listened to people say that this product didn’t sell well or that item was a bomb. Team after team, brand after brand, and retailer after retailer continue to over develop, over assort, and under perform. It’s not because of uncooperative weather or bad product or new trends or whatever excuse is made at the time; it’s because too much product was made and bad bets were placed against the wrong styles within that inventory. Too much, too often, not focused…

Here’s an important fact: no brand or retailer has ever gone out of business because they had too little inventory–it’s the opposite.

Here are three things to get serious about if you want to be a player and have a product, brand, or business that consumers want with passion.

#1 GET REAL ABOUT YOUR SALES ESTIMATES. First things first, sales are the amount of products consumers buy of the things you make. It doesn’t matter if it’s consumed online or in store. It also doesn’t matter if you’re a wholesaler or retailer. You have to know how much goods you sell to consumers. If you don’t, figure it out fast.

Now that that’s out of the way, let’s recall Sir Isaac Newton’s first law of motion, which is a body in motion tends to remain in motion unless acted upon by an outside force. If you need further insight on this matter, I’d recommend reading the amazing book by Neal Stephensen called Seveneves. In it you can read all about orbital paths and the forces necessary to disrupt those paths and cause meteors or other bodies to behave like a good pet and do as you say. It’s a book recommended by Bill Gates for crying out loud so you know it’s awesome–and geeky.

Anyhow back to reality, like the first law of motion, the same is effectively true with sales. Something big had to happen to go from selling nothing to selling something. You had to create or disrupt another force. Trends fade due to other trends gaining momentum. Think of trends like friction–it just is and you have to account for it.

Now don’t be fooled, sales are highly predictable especially when you have an existing business with data. They are like orbital paths. I’ve worked with teams and we have consistently projected sales 18 to 24 months into the future that have actuated at plus or minus 2% (that’s freaking amazing) barring any major events like 9/11. In all the years of estimating forward sales, we have found that unless something significant and meaningful happens, those sales continue along a very predictable path much like a body in motion against the normal forces of gravity and friction–economics and trends.

Another point here is that the larger the body, or sales volume in our case, the more of an outside force or action is needed to change its course. For physics buffs, this is Newton’s second law of inertia–big stuff needs a greater force to move it than does little stuff. You should be able to quantify any meaningful effort to change the path of your business—new shops, stores, distribution, market reach, etc. More inventory and more iterations of the same products does little to affect change. It’s just more mass. In order for change to happen, the disruption has to be material and it has to be an investment in time, money, and resources.

As the saying goes, “hope is not a strategy”. You cannot “will” your way into gaining more sales anymore than you can use your mind to move a stone.

Get real about your estimates and know that hope is not a strategy.

#2 CUT INVENTORY IN HALF. Yes you heard me and no I’m not kidding. The global apparel industry produces more than 150 billion garments every year and there’s only around 2 billion people with the means to consume those goods! The ratio of what you produce to what you actually sell at margin probably isn’t much better. Take a look and see how many units you make in a year compared to how many units CONSUMERS purchase at viable margin in a year. I promise it will be staggering.

If you took the time and figured out how much you honestly expect to be able to sell in a year or period, why would you buy 2 or 3 times the inventory you need to generate those sales? It’s a waste of money and resources plus it stunts demand. When we buy too much inventory, we flood the marketplace with goods and destroy any sense of demand. Don’t be afraid to let your consumers WANT your products.

As a rule of thumb, what you plan to sell plus how much you can responsibly take in markdowns, equals the amount of receipts you need to deliver. It’s just math. Don’t make it complicated. If you expect to do sales of $100 and want a markdown rate of 30%, buy $130 worth of product. Why would you buy $500 worth of stuff to sell $100 worth of products?

Hear’s a cheat sheet: if the product you produce has a lot of sizes, e.g., footwear and apparel, you should buy no more than 1.4x sales. If your products don’t have sizes, e.g., handbags and jewelry, receipts should be no more than 1.2x sales.

This shouldn’t be looked at as tough medicine. It should be viewed as religion. It should be CORE to your business acumen. You can do sales with a lot less goods. And guess what? Doing that only creates demand, it generates a lot more gross margin, let’s more people keep their jobs, and it’s the right thing to do for our environment.

Stop being afraid and do more with less.

#3 PLACE MEANINGFUL BETS. A lot of brands and retailers hedge their buys. Instead of taking big bets, they buy a little bit of everything–and a little bit of everything results in a whole lot of nothing.

After you’ve completed step 2 above and buy a lot less goods in general, now you have to buy more of the right stuff and less of the wrong stuff. If you have data and if you’re engaging your customers, this is easy. Don’t make it more complicated than it is.

Here’s the point, you have to figure out what is going to drive sales and buy a lot of those products. You also have to figure out what is going to excite your audience and splash those products around. Don’t buy all your SKU’s equal. Don’t even let them get close. Pareto’s principle states that 80% of effects come from 20% of causes, which in our case means 20% of your SKU’s will likely generate 80% of your sales. Don’t fight it. It works. The beauty of this also is that it doesn’t mean you can’t or shouldn’t have breadth of an assortment. Go at it. Have a broad assortment of goods. Just make sure that a small portion of those SKU’s account for most of your inventory. What consumers see and what you have in the stockroom should be two completely different things–an optical illusion. That’s what inventory management is all about.

If you’re not buying your top SKU’s exponentially deeper than your bottom SKU’s, you’re destroying your business and it’s your fault. It’s not the weather. It’s not the economy’s. It’s not the design team’s fault. And it’s not trends. It’s you, and I mean that if you’re a planner who figures out how much to buy for when, an allocator that distributes the product, a merchandiser that figures out what to buy, a marketer that looks at what to promote, or a leader that looks to build a healthy business that people want to be a part of. If you were a portfolio manager at an investment company, which essentially we all are in some manner or another, your success would depend on how well you place your bets and beat the market or your competition.

HERE’S THE GUARANTEE. If you are realistic and honest about how much consumers are likely to buy of your products, buy just enough inventory to generate those sales, and place big bets inside that inventory, I guarantee you will drive significantly more sales, capture more gross margin than you know what to do with, and your consumers will want your products more than ever before.

Final food for thought: if we produced 10% fewer garments each year, that would equal 15 BILLION fewer garments going to landfill. That’s 15 billion less in materials production, which results in waste, pollution and toxins. Furthermore, none of that would be lost sales. All of it would be an increase of profit in terms of margin, our environment, demand from consumers, and strength of our industry.